Citgo reaches deal to lease and restart idled Aruba refinery

ORANJESTAD, May 13 (Reuters) - The Citgo Petroleum refining
unit of Venezuela's state oil company Petroleos de Venezuela SA
has reached a deal to lease and restart an idled
235,000-barrel-per-day refinery in Aruba, the government of the
Caribbean island said on Friday.

The agreement involves a 25-year lease that would allow
Citgo to operate the refinery after investing in an overhaul
that Aruba said could cost at least $1 billion.

The idled refinery, formerly operated by Valero Energy Corp
, could be up and running again within 1-1/2 to two
years.

"The agreement is completely formalized," said Aruba's
Energy Minister Mike de Mesa, adding that details would be
announced "shortly."

Valero halted refining operations in Aruba in 2012 due to
low profit and classified the facility as "abandoned" in 2014,
except for terminals currently used by the U.S. company and
PDVSA, as the Venezuelan state oil company is known.

Caracas-based PDVSA did not immediately respond to a request
for comment.

Aruba would offer a good way for PDVSA to produce heavy
naphtha that it currently imports as diluent for its extra heavy
oil output, and it would also produce refining feedstock for
Citgo, sources told Reuters earlier this year.

Aruba's parliament now needs to approve the contract, a
formality that is expected to take two weeks. Re-opening the
refinery would be a big boost for the small island's economy.

(Additional reporting by Alexandra Ulmer in Caracas and
Marianna Parraga in Houston; Writing by Alexandra Ulmer; Editing
by Tom Brown)